McCoy v. Erie Ins. Co.
| Decision Date | 18 June 2001 |
| Docket Number | Civ.A. No. 2:01-0054. |
| Citation | 147 F.Supp.2d 481 |
| Court | U.S. District Court — Southern District of West Virginia |
| Parties | Diana G. McCOY, Plaintiff, v. ERIE INSURANCE COMPANY, et al., Defendants. |
D. Kevin Moffatt, Harless & Moffatt, PLLC, Charleston, WV, Ronald R. Parry, David A. Futscher, Arnzen, Parry & Wentz, PSC, Covington, KY, Judy L. Cates, Carr, Korein, Tillery, Kunin, Montroy, Cates, Katz & Glass, Belleville, IL, Christopher A. Seeger, Seeger Weiss LLP, New York City, for plaintiff.
James D. Lamp, Sheryl A. Rucker, Lamp, O'Dell, Bartram, Levy & Trautwein, Huntington, WV, Jeffrey A. Less, Paul B. Bech, Bazelon Less & Feldman, P.C., Philadelphia, PA, for defendants.
Pending are Plaintiff's motion to remand and Defendants' motion to dismiss.1 Both motions are DENIED.
On May 17, 2000 Plaintiff Diana G. McCoy was involved in an accident that seriously damaged her car. Erie insured the vehicle.2 The applicable Policy contained the following language under the heading "Physical Damage Coverages:"
We will pay for loss to an auto we insure and its equipment not caused by collision or upset. We will pay for loss less the deductible, if any, shown on the Declarations. Comprehensive coverage includes glass breakage, contact with persons, animals, birds, missiles or falling objects. Should only your windshield be damaged, we will not apply the deductible if the windshield is repaired rather than replaced.
We will pay for loss to an auto we insure and its equipment caused by collision or upset. We will pay for loss less the deductible shown on the Declarations.
(Ex. 1, Not. of Remov. at 7.) The term "loss" was defined by the Policy as "direct and accidental damage or loss." (Id.)
Erie elected to repair the vehicle and paid $6,802.34 for the work. McCoy, however, asserts Erie has a further financial obligation to her under the Policy. She asserts no amount of repair work could have returned her vehicle to its "pre-loss condition" so as to account for what she calls "diminished market value" (DMV). Erie has refused her claim for DMV compensation.
McCoy asserts she and other West Virginia policyholders paid premiums to Erie reasonably expecting the insurer would cover DMV. Instead, she asserts Erie has routinely and deliberately concealed DMV coverage and refused to pay for it.
On October 20, 2000 McCoy, individually, and on behalf of unnamed putative class members, instituted this action against Erie. McCoy asserts her claim, and that of each and every unknown class member, "is less than $75,000.00 and therefore federal jurisdiction does not exist in this case." (Compl. ¶ 2.) She specifically seeks the exclusion from the putative class of "all persons who have claims in excess of $75,000.00[,]" (id. ¶ 24), and requests a judgment "Limiting the recovery of McCoy and each individual Class Member to a sum not to exceed $75,000.00." (Id. at ¶ f.)
The Complaint, however, seeks substantial relief. McCoy requests injunctive and declaratory relief requiring Erie to (1) disclose DMV coverage and pay associated losses; (2) calculate DMV and other losses when claims are made; and (3) "disgorge all ill-gotten profits and gains realized from [its] damage calculation practices[.]" McCoy further requests (1) attorney fees and costs; (2) compensatory and punitive damages; and (3) the imposition of a constructive trust to include monies previously paid by McCoy and the putative class, including premiums, service charges and other fees.
Erie removed, but McCoy countered with a motion to remand. Erie asserts diversity jurisdiction is met, alleging the requisite amount in controversy is satisfied by, inter alia, McCoy's claims for unjust enrichment and disgorgement of profits and the demands for declaratory and injunctive relief. Erie also moves to dismiss the case.
In Iowa Central Ry. Co. v. Bacon, 236 U.S. 305, 35 S.Ct. 357, 59 L.Ed. 591 (1915), the plaintiff asserted he had been damaged in the sum of $10,000.00, but requested a judgment of only $1,990.00, $10.00 short of the $2,000.00 amount-in-controversy requirement. On the question of subject matter jurisdiction, the Supreme Court stated Id. at 310, 35 S.Ct. 357.
Three decades later in St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 58 S.Ct. 586, 82 L.Ed. 845 (1938), the Supreme Court addressed a post-removal attempt to reduce the pled amount in controversy to a sum below the statutory minimum. Red Cab stated similarly:
The rule governing dismissal for want of jurisdiction in cases brought in the federal court is that, unless the law gives a different rule, the sum claimed by the plaintiff controls if the claim is apparently made in good faith.
....
If [plaintiff] does not desire to try his case in the federal court he may resort to the expedient of suing for less than the jurisdictional amount, and though he would be justly entitled to more, the defendant cannot remove.
Id. at 288-89, 293, 58 S.Ct. 586 (emphasis added).
Many courts have seized on the Bacon and Red Cab dicta as a bright-line rule compelling remand where a specific sum less than the jurisdictional amount is stated. That approach, however, may not assure the diverse defendant exposure to a damage award ultimately less than the jurisdictional minimum. Many state court systems, including West Virginia, have interpreted their civil rules amendments in a way that encourages an adroit plaintiff to deny a diverse defendant access to the federal forum and yet, later, expose that defendant to a damage award that would have supported exercise of federal jurisdiction.
To illustrate, Rule 54(c), West Virginia Rules of Civil Procedure, provides in part:
[E]very final judgment shall grant the relief to which the party in whose favor it is rendered is entitled, even if the party has not demanded such relief in the party's pleadings.
Id. (emphasis added); see also W.Va. R.Civ.P. 15(b). The function of both Rules was discussed in Berry v. Nationwide Mut. Fire Ins. Co., 181 W.Va. 168, 177, 381 S.E.2d 367, 376 (1989):
Prejudice to the adverse party is the paramount consideration in motions to amend. Absent a showing of prejudice to an adverse party motions to amend should be granted....
....
In the final analysis it is not the amount stated in the ad damnum clause but the actual proof of the plaintiff's damages which will control the issue. Furthermore,
Id. ().
The Berry interpretation thus permits strategic use of the state civil rules as a device to prevent removal, effectively permitting a plaintiff to avoid federal court and either (1) amend his prayer for relief, or (2) simply ignore it and then request the jury to make a more substantial award once the statutory deadline for removal has passed.
Considering this potential for abuse, the Court does not believe itself bound ineluctably to grant remand simply because a plaintiff "limits" himself to a demand for recovery below the jurisdictional minimum. Accordingly, despite McCoy's attempted, unilateral circumscription of federal jurisdiction, the Court examines whether exercise of removal jurisdiction is appropriate.3
A related issue is worthy also of discussion, namely the extent to which a plaintiff's unilateral stipulation may impact an amount in controversy determination. The undersigned has previously permitted rather relaxed, post-removal "binding representation[s]" and stipulations to carry great weight in determining the amount in controversy. See, e.g., Adkins v. Gibson, 906 F.Supp. 345, 348 (S.D.W.Va.1995). Adkins and its progeny, however, must now yield to a more coherent, balanced approach. The better rule requires a formal, truly binding, pre-removal stipulation signed by counsel and his client explicitly limiting recovery. See Hicks v. Herbert, 122 F.Supp.2d 699, 701 (S.D.W.Va.2000) ( ). The stipulation should be filed contemporaneously with the complaint, which also should contain the sum-certain prayer for relief. See De Aguilar v. Boeing Company, 47 F.3d 1404, 1412 (5th Cir.1995) ().
A binding pre-removal stipulation should alleviate unseemly forum gaming, which has occurred frequently in the wake of Adkins' relaxed approach. The requirement of a pre-removal stipulation will not prevent removal, but it will be an important consideration for a court applying the principles discussed infra.
The burden of establishing federal jurisdiction rests with the party seeking to litigate in federal court. McNutt v. General Motors Acceptance Corp. of Indiana, 298 U.S. 178, 189, 56 S.Ct. 780, 80 L.Ed. 1135 (1936). When a case has been removed, the defendant bears the burden of showing federal jurisdiction has been invoked properly....
To continue reading
Request your trial
-
Moriconi v. At & T Wireless Pcs, LLC
...Cir. 1997) (finding same); Harris v. Physicians Mut. Ins. Co., 240 F.Supp.2d 715 (N.D.Ohio 2003) (finding same); McCoy v. Erie Ins. Co., 147 F.Supp.2d 481 (S.D.W.Va.2001) (finding same); Aetna U.S. Healthcare, Inc. v. Hoechst Aktiengesellschaft, 54 F.Supp.2d 1042 (D.Kan., 1999)("Aetna I")(f......
-
Dish v. Firstplus Home Loan Trust 1996-2, 1:01CV00923.
...preponderance of the evidence that the amount in controversy actually exceeds the jurisdictional amount. See also McCoy v. Erie Ins. Co., 147 F.Supp.2d 481, 485 (S.D.W.Va.2001) (noting that a better rule is to require the plaintiffs and their counsel to sign a binding pre-removal stipulatio......
-
West Virginia ex rel. Mcgraw v. Minnesota Mining
...here. 9. This conclusion is reinforced by common sense, a relevant consideration in the removal context. Cf. McCoy v. Erie Ins. Co., 147 F.Supp.2d 481, 489 (S.D.W.Va.2001)(quoting Sayre v. Potts, 32 F.Supp.2d 881, 887 (S.D.W.Va.1999)). Although defendants did not mention the BEP explicitly,......
-
Virden v. Altria Group, Inc.
...§ 1332. A defendant seeking removal must prove the jurisdictional amount by a preponderance of the evidence. McCoy v. Erie Ins. Co., 147 F.Supp.2d 481, 488-89 (S.D.W.Va.2001). In the Fourth Circuit, removal statutes are strictly construed against removal. Mulcahey v. Columbia Organic Chems.......